EDGE_G_4 12-59-34_Layout 1 - The Tax Shelter Report

Edge Performance VCT plc
5
• Non-qualifying Investments
Initially, the net proceeds of the Offer will be invested in various fixed income securities, cash and cash equivalent
assets, offering a high degree of capital preservation. Whilst a suitable level of return will be sought, the Company
also regards capital preservation as an important consideration. Subsequently, up to 30% of the investment funds
will be maintained in such investments whilst the balance is reinvested in Qualifying Investments.
• Dividends and share buy-backs
The Board intends to distribute most of the Company’s available net income through dividends, and to make share
buy-backs at a discount of no more than 10% to net asset value, subject to liquidity constraints and regulatory
requirements.
Summary of Investment Policy
• Edge Performance offers the opportunity to invest in the entertainment industry, and seeks to allow investors to
take advantage of VCT tax reliefs whilst combining:
• high targeted returns;
• downside risk protection; and
• liquidity.
• Up to 30% of each of the C, D, E, F and G Share Funds will remain in a range of fixed income securities and cash
and cash equivalent assets. Of the remainder, the Company will balance investments with a high level of capital
protection with other investments where the potential for significantly higher returns justifies a lower level of capital
protection.
• The intention is that the Investor’s risk is thereby minimised, underpinning the return of the Investor’s effective cost
of investment of 70p per Share (assuming income tax relief at 30%).
XV:1.1
VCT tax benefits
VCT status currently confers the following benefits on Shareholders:
Income tax relief at 30% – Qualifying Investors will receive tax relief of up to 30% of the amount subscribed for G Shares,
provided the G Shares are held for at least five years.
For every £10,000 invested, up to £3,000 can be reclaimed from HM Revenue & Customs, so an investment of £10,000
could effectively cost only £7,000. Therefore, after the initial costs of the Offer (5.5%), that £7,000 could be worth
£9,450, an increase of 35%, before the Company even makes its first investment.
Example £
Investment in G Shares 10,000
Less income tax relief at 30% (3,000)
Net cost of investment 7,000
Tax-free dividends, capital distributions and capital gains – in respect of VCT investments not exceeding £200,000 in
aggregate in any one tax year, dividends and gains on disposal of G Shares are exempt from tax under current legislation.
Remuneration of Edge Investment Management
• Annual management fees of 1.75 % of the net asset value attributable to the G Shares.
• Annual administrative services fee of £175,000 (plus VAT), in total attributable to the C, D, E, F and G Shares.
• Total annual operating expenses of the Company (excluding performance-related incentive fees, irrecoverable VAT
and trail commission to intermediaries in respect of the C, D, E and F Share funds) capped by the Manager at 3%
of the net asset value of the Company. Assuming full subscription under the Offer, it is anticipated that such annual
operating expenses will be no more than 2.5%.